Below is the third post in a three-part series exploring this summer’s Market Basket leadership struggle. Ted Clark, professor of entrepreneurship and innovation and executive director of the Center for Family Business at D’Amore-McKim School of Business, explains what stakeholders from all angles should learn from the saga of the summer.
- To read Part One, “The Tale of Two Arthurs: Who Really Won the Market Basket Fallout?” please click here.
- To read Part Two, “From the Boardroom to the Shelves: What Changes Will Market Basket Face?” please click here.
It appears the dust has settled. At Market Basket stores all around the region, products are back on the shelves and customers are once again packing the aisles. The problem? The chain is a very different organization now than it was in May of 2014. On the surface, Market Basket is back on track — it recently opened an enormous 80,000-square-foot store in Revere, Mass. (just north of Boston) and has several more openings planned — but behind the scenes and among external analysts, questions linger about whether the affordably-priced family-owned store truly remains a family business.
The Demoulas family was able to retain ownership of Market Basket, but in order to do so and reinstate CEO Arthur T. Demoulas, they paid a hefty sum of $1.5 billion for majority control. As Ted Clark, professor of entrepreneurship and innovation and executive director of the Center for Family Business at D’Amore-McKim School of Business, explains, the move may have earned Arthur T. his job back, but it also introduced investors and with that a new level of accountability.
“The family did a great job keeping the store running as successfully as they did before, but Market Basket is now just as investor-held as many of its competitors and it will need to be more careful,” said Professor Clark. “Market Basket is feeling its way through this new financial structure and other chains will be looking to strike back.”
Professor Clark stressed that just because two Arthurs are down to one, it doesn’t mean the family-owned concept is gone from Market Basket. Arthur T.’s side of the family is still very much involved with not only Market Basket, but a whole portfolio of businesses.
“Market Basket very well may come back stronger now that the conflict is gone. When there’s a festering conflict like we saw here, generally the sooner it’s handled, the better,” said Professor Clark. “It might not have come to this if they had dealt with these family conflicts much earlier. Now, debt is the cost of removing conflict, so they will likely have a plan in place to make this work.”
It will be interesting to see whether the Demoulas family will continue to embrace the family-oriented culture that carried the supermarket chain to regional success. Benefits such as competitive salaries and reduced product pricing allowed stakeholders to feel as though they really were a part of the family. Those perks may soon face scrutiny as debt payments begin.
By Professor Clark’s prediction, it could take more than a year before we see any impact from this conflict and changes at Market Basket. Debt causes pressures on cash flow and Market Basket will face yet another true test: Maintaining its brand of integrity and the corresponding loyalty to better benefits and lower pricing.
“Only time will tell what the future holds for Market Basket,” said Professor Clark. “Now that the conflict is resolved, the chain could even be stronger than it was before because leadership can finally get back to focusing on what’s important: Developing the business.”
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